Motorola 2013 Annual Report Download - page 76

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74
Significant components of deferred tax assets (liabilities) are as follows:
December 31 2013 2012
Inventory $ 51 $ 1
Accrued liabilities and allowances 135 134
Employee benefits 825 1,544
Capitalized items 179 254
Tax basis differences on investments 20 28
Depreciation tax basis differences on fixed assets 16 19
Undistributed non-U.S. earnings (9)(150)
Tax carryforwards 1,382 1,155
Business reorganization 39 12
Warranty and customer reserves 39 45
Deferred revenue and costs 263 310
Valuation allowances (256)(308)
Deferred charges 38 36
Other (62)(60)
$ 2,660 $ 3,020
At December 31, 2013 and 2012, the Company had valuation allowances of $256 million and $308 million, respectively,
against its deferred tax assets, including $233 million and $272 million, respectively, relating to deferred tax assets for non-U.S.
subsidiaries. The Company’s valuation allowances for its non-U.S. subsidiaries had a net decrease of $39 million and $64
million during 2013 and 2012, respectively. The decrease in the valuation allowance relating to deferred tax assets of non-U.S.
subsidiaries reflects current year deferred tax movements, expiration of loss carryforwards and exchange rate variances.
During 2012, we recorded $60 million of tax benefit related to the reversal of a significant portion of the valuation
allowance established on certain foreign deferred tax assets. In the first quarter of 2011, the Company reassessed its valuation
allowance requirements taking into consideration the distribution of Motorola Mobility. The Company evaluated all available
evidence in its analysis, including the historical and projected pre-tax profits generated by the Company's U.S. operations. The
Company also considered tax planning strategies that are prudent and can be reasonably implemented. During 2011, the
Company recorded $274 million of tax benefits related to the reversal of a significant portion of the valuation allowance
established on U.S. deferred tax assets.
The U.S. valuation allowance as of December 31, 2013 relates to state tax carryforwards. The Company believes that the
remaining deferred tax assets are more-likely-than-not to be realizable based on estimates of future taxable income and the
implementation of tax planning strategies.